I've done a great deal of thinking about The Flippening, and what will happen directly afterward. This event will represent a fundamental shift in how major players see Blockchain and its future. I'd like to share some predictions, if I may.
But, before we get to what happens after, let's look at how far we have come:
- Turing Complete Blockchains Work.
At the start of Ethereum's development and launch, BTC maximalists cast doubt about whether it was even possible to use blockchains in this way. "It won't work", they said.
- Implementation risk can be managed
We have developed rigorous security audit best practices and pioneered correctness proofs for smart contracts. There are contracts that handle enormous sums of money on a daily basis. "It will never be secure", they said.
- Mining interests have been tamed
The interests of Miners, which are often not aligned to those of the users of the network itself, have been successfully tamed on Ethereum. The users have asserted control over how the network will change and grow. "The miners won't allow PoS to happen", they said.
- Energy Waste has been solved
The PoS fork will reduce Ethereum's energy footprint from 25.754 GWh annually by 99.95%. "Proof of Work is necessary to secure blockchains", they said.
- Use cases exist
As recently as 2 years ago, there were claims that no use cases exist. DeFi and NFT markets have consigned that idea to the dustbin. As for the next use cases, we may not know what they will be, but we don't have to know. The composability of the smart contract ecosystem allows ingenuity to flourish, and there is untold wealth waiting for those who can dream big and deliver. The apps will come.
- The Banks and Hedge funds are here
Big Money has arrived and after watching carefully, has entered the space. They began dipping their toes over the last year, and they are getting ready to wade all the way in. Perhaps they are already doing so. They are watching everything that happens and looking for the right play, trying to pick the big winner. They have watched crypto investors enjoy 50x to 100x gains. You can bet that they also want their 30x.
- Government has no interest in shutting us down
Although China finally decided to take the power of blockchain away from its citizens, the rest of the world has recognized blockchain tech as an asset to society at large and to industry specifically. Governments are not willing to allow blatant lawbreaking on blockchain platforms, but they are not moving to shut us down. The era of embrace and regulation has begun.
- Ethereum can scale
Until this summer, the narrative that Ethereum cannot scale was rampant. Now, we see a dozen rollup L2 networks that are all competing freely to provide the best service to the users. At this very moment, the community is onboarding these networks, and enjoying use of Ethereum at high speeds and drastically reduced cost.
This, I believe, was the final straw.
Bitcoin is simply no longer interesting, and feels like a dated technology. It does not change. There's nothing new coming from it, and when you see everything that's happening elsewhere, it's really a disappointment.
Some people use the metaphor "digital gold" for Bitcoin, but it doesn't really deserve that name, because gold has been around for aeons. Bitcoin has been around for 11 years. It does not have the property of profound historical weight. It does not have the property of resistance to value fluctuations. The narrative is "store of value", but it doesn't seem to be a great fit for that purpose.
So, if Bitcoin isn't storing value as well as it's supposed to, it has defined itself as being completely resistant to evolution and change, and most importantly, if Bitcoin's value proposition comes entirely from its market position and first mover status, where does that leave it after a Flippening Event?
My guess would be that the spell will be broken, and Bitcoin will wither away to rank 3 or 4 on the market capitalization charts, and probably stay there for a very long time.
Ethereum will become the new undisputed leader in terms of market capitalization. The new equilibrium will favor Ethereum's market dominance to an extent only enjoyed by Bitcoin in its youth.
The biggest losers in the aftermath will be the dozen or so "Ethereum Killers", whose developers will abandon them to work on Ethereum based projects.
Ethereum compatible projects, especially ones that have a unique value proposition, will do very well.
And then what? I wouldn't care to guess.
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